Nextel Communications' bank debt traded several times last week, with a total of $25 million changing hands. The company reportedly gave a presentation for Goldman Sachs early in the week stating that earnings will not be down as much as expected, and that reportedly sparked trading. Dealers said approximately $100 million has traded over the last two weeks as market players snatched up the credit for their books. The paper traded up to 96.58 early last week, which was up 3/4 of a point from previous levels. "It's the Allied Waste of old, just constantly trading. It's one of the better names of the industry and EBITDA-positive," a dealer said, attributing the paper swaps to "a lot of inter-dealer stuff."
Dealers seem divided on the telecommunications industry's recovery, as some credits are quickly inching up and others keep struggling. "Nextel suffered from guilt by association," a market player said. XO Communications' levels dipped to 92 last week. "The CLECs had been under pressure. The wireless names that had been implementing third generation technology are not doing well in Europe," a market watcher said. "A lot of players are competing for customers, and it's a question of whether they can increase pricing to fund future expenditures. The CLEC market has been battered, and a lot have not been able to sign up new customers."
Late last month, heavy telecom paper pushed down Nextel's levels to 92 1/2 (LMW, 4/25). The company has a $5 billion deal, which breaks down into four tranches and expires in 2008. Bank of Nova Scotia, J.P. Morgan Chase, Barclays Capital and TD Securities lead the deal, according to Capital DATA Loanware. It is priced at 3 3/8 % over LIBOR.